The Upcoming General Election
The hotly anticipated election result is just around the corner. An election which has caused turmoil in the property market and general uncertainty on what the future holds.
With the prospect of additional legislation hanging over the heads of lettings agents and the private rented sector in general, the upcoming election is very important for the industry. Before Mrs May called the 8th June election a number of measures were in discussion including a ban on letting agents charging fees to tenants. A consequence of this is likely to be a rise in the fees landlords pay letting agents to cover the letting agent’s costs of processing tenancy applications and administering tenancies.
All three leading parties (Labour, Conservative and the Liberal Democrats) have different approaches and agendas when it comes to the housing market, particularly the private rented sector (PRS).
The Labour party intends to strengthen consumer/tenant rights in the private rented sector – an industry they believe is unregulated and led by landlords/agents. John Healey, the party’s housing spokesman has announced that renters will be encouraged to report rogue landlords letting dangerous or substandard accommodation.
Labour’s manifesto pledges to “Introduce new legal minimum standards to ensure private rented homes are fit for human habitation’’ with new measures to empower tenants to take action where their properties are not up to scratch.
Under Labour, councils would also be granted new powers to license private landlords and tough sanctions would be placed on those who do not provide suitable housing for private tenants.
It seems that Labour are keen to take greater steps to intervene in the rental market. Their pledge to make new three-year tenancies ‘the norm’, with an added inflation cap on rent rises has been met with much resistance by both Landlords and agents within the lettings industry.
Members of the Association of Residential Letting Agents (ARLA) and RLA (Residential Landlord Association) believe that rent controls put forward by the Labour party will see landlords exit the market and reduce supply for tenants.
Many of these policies could have a catastrophic effect on the PRS, which is still coming to terms with tax changes that have already forced some landlords out of the market altogether and are set to impact further on the Landord’s income.
The Conservatives are much less keen on blanket regulation and prefer to weed out rogue landlords one by one rather than potentially punishing good, law-abiding landlords with rules and procedures that are too strict and inflexible The Conservative Manifesto has been accused by market commentators of being ‘light on policies directly affecting to the Private Rented Sector (PRS)’, with the Residential Landlords Association commenting that “…given the previous tax raids on buy-to-let landlords, maybe this is something to be grateful for…”
The Liberal Democrats want additional controls on the private rented sector aimed at addressing what it describes as the “emergency” condition of the UK housing market. Similar to Labour and the Conservatives’, the Liberal Democrats are supporting the proposed ban on letting agents’ fees on tenants in England.
The Liberal Democrats have backed many of Labour’s pledges and intend to roll out similar PRS policies if they are elected. This includes longer tenancies of three years and inflation-linked annual rent increases built in “to give tenants security and limit rent hikes;”
In a bid to help young people struggling to raise a tenancy deposit, they have announced plans to establish a new ‘Help to Rent’ scheme to provide government-backed tenancy deposit loans for all first-time tenants under 30.
This snapshot of the main party pledges on the PRS would suggest that a new party in government will bring even more change to an industry beset by tumultuous changes over recent years. Changes including stamp duty surcharges on second properties, the erosion of tax allowable expenses including mortgage payments and changes to capital gains tax (CGT) reporting.
What all three main parties seem to agree on is the ban on Letting agents being able to charge fees to tenants. The likelihood of this coming into being will certainly have a major impact on how the industry is structured.
This is a subject for another day.